The moral challenge for businesses here in the UnitedStates it difficult enough when balancing one’s profit interests against the
needs of employees, consumers, governments and special interest groups. The
moral challenge is even more intense for multinational companies who need to
live up to moral expectations both in the US and in host foreign countries. In
developed countries, the moral expectations of the host country are as
stringent as our own. With third world host countries, though, the moral
expectations often more lax, and multinationals are tempted to lower their standards
when situations permit. In this chapter we will look at three areas of moral
concern for multinationals: bribery, influencing foreign governments, and
exploiting third world countries.
Bribery in Third World Countries. When we think of moral dilemmas that multinationals face
we usually think of the pressure on companies to bribe government officials in
third world countries. Although bribery of government officials also takes
place in the United States, it is rare and severely punished. By contrast,
bribery happens with greater frequency in third world countries, and there is a
feeling that it is normal practice to bribe government officials. We may
succinctly define a bribery as condition in which a person, such as a
government offical, agrees to be paid to act as dictated by an interested
party, rather than doing what is required of him in his official employment.
What is central to the notion of a bribe is that an agreement is made, even if
the act itself is never performed and the payment is never made. It is also
central that the person being bribed implicitly agreed to abide by the rules of
his government, organization, or legal system. We need to distinguish bribery
from extortion, which is where an official requires payment to perform his
otherwise normal duties. For example an agent of the FDA may extort a company
by approving of a product that passes approval standards anyway. Extortion has
a victim, whereas bribery has no victim. We also need to distinguish bribery
from gift giving, which includes neither implicit nor explicit agreements, even
if the giver intends the gift as an inducement. An official may accept a gift
innocently, and sometimes genuine friendships are formed that involves
exchanging gifts. Further, gift giving in foreign countries is often part of a
needed business ceremony. To avoid doing wrong, the receiver of a gift needs to
be confident that he remains impartial in conducting his official duties. In
some occupations, such as law enforcement, established codes often forbid gifts
since it is too important to risk losing impartiality through gift giving.
Although few business people
publicly defend bribing officials in third world countries, there is a common
attitude within multination organizations that condones bribery on several
grounds. First, there are strictly financial considerations. Payoffs can
prevent delays that might otherwise throw a company into financial ruin. In a
truly capitalistic environment, we need an even playing field, and if foreign
businesses engage in bribery and US firms do not, then US firms will be at a
competitive disadvantage and will ultimately lose to foreign business. Second,
there are practical considerations owing to what appears to be the universal
nature of bribery in third world countries. Often foreign government officials
are so corrupt that it is virtually impossible to do business without playing
by the unspoken rules. Thus, there’s nothing morally wrong with participating
in bribery, especially if the institution itself is in question, such as a
government like Nazi Germany.
Endorsing, Influencing, and Opposing
Foreign Governments. Whether in the US
or in foreign countries, big businesses have an intimate relation with
governments. Businesses lobby for fewer regulations, lighter taxes,
governmental subsidies, and access to natural resources. Businesses also depend
on government offices, such as law enforcement agencies, court systems, permit
offices, and transportation networks. So, when a US company sets up base in a
foreign country, its interaction with government creates the possibility for
unpleasant situations. Multinationals often locate in countries with repressive
right wing governments since these tend to be more politically stable. By doing
so, they implicitly support these governments, which would otherwise not be
supported by socially conscious people. At the other end of the spectrum,
sometimes multinationals find themselves in left wing countries that are
hostile to the business’s capitalistic interests. In these cases, the business
might be tempted to oppose or even undermine that government, irrespective of
the benefit that local people derive from that government’s left-wing policies.
Between these two extremes, there is the normal course of doing business in
developing countries, which involves the normal lobbying efforts that we have
here in the US. This involves at least attempting to influence governments of
third world countries.
An example of the first extreme –
businesses endorsing right wing governments – is the presence of American
multinationals in South Africa, especially during the 1970s and 1980s. The
white Apartheid government at the time endorsed a policy of what amounted to
institutionalized slavery of its black citizens. Although constituting less
than 10% of the country’s population, the white Afrikaners controlled the vast
majority of the country’s economic wealth. Blacks were segregated, restricted
in their speech, jobs, and movements, and constantly under threat from white
policing forces. The white Afrikaners justified their Apartheid policy by
arguing that it was God's plan that Afrikaners are in Africa, and it is God’s
plan to divide people into groups. US multinationals all recognized the
inherently immoral nature of the Apartheid government and that, at minimum US businesses
in South Africa needed to be sensitive to the oppressed condition of the
blacks. The harshest critics, though, called for complete divestment of
American business interests from South Africa. Politically, U.S. business in
South Africa offered legitimacy to the Apartheid government. Economically,
whatever helped South Africa's economy helped Apartheid, and divestment would
cripple the South African economy. Also, American companies in South Africa had
a history of civil rights abuses towards blacks.
More moderate critics maintained
that companies whose products directly benefit the government should divest,
such as those the make police weapons. However, companies whose products
directly benefit Blacks should not divest. Companies whose products directly
benefit both can go either way. For example, the Polaroid Company chose to
leave South Africa since they could not control the flow of their product into
government hands, such as use in passbook pictures that regulated the movement
of the black South Africans.
The actions of American
multinationals in foreign markets have a direct effect on the image on the U.S.
itself. People around the world see the United States as an economic
imperialist, ready to gobble up the resources of small foreign countries. The
situation is made worse when multinationals coerce foreign governments
especially in Third World countries.
Exploiting Third World Countries. Critics frequently accuse multinational corporations of
exploiting the resources and workers of third world countries. Agricultural
businesses often take the best land and use it for export crops, which
diminishes the amount of good land that the locals can use for their own food
needs. Drug companies and hazardous chemical industries take advantage of more
lax safety regulations, which often results in disaster. Mining industries
exploit the wealth of the country for only a few rich landowners. Since many of
these natural resources are in finite supply, developing countries have little
hope of relying on them for future security once they are used up. Banks and
financial institutions do not hire the local people, yet these businesses
benefit by bringing in local money. Manufacturing and service industries
introduce poverty to many areas by attracting more people to a factory than
they can employ. They typically pay much less to third world employees than to
Americans, which suggest a double standard of labor value. If they pay wages to
third world employees that are higher than what indigenous businesses can pay,
then they attract the best workers, which hurts employers in surrounding
businesses. Also, all of the above types of businesses destroy the local
culture by introducing an American climate.
Is cultural relativism true? Philosophers have
debated this question for over two thousand years. Many cultural practices are
unquestionably shaped by cultural environments, such as rules requiring women
to covering their heads in public, and prohibitions against drinking alcohol or
eating types of meat. However, there seem to be some foundational principles
that appear uniformly, such as obligations to care for one’s children and
elderly parents, prohibitions against assault, rape, stealing, and murder. Some
philosophers argue that these principles appear universally in societies since,
without them, a society simply could not continue. For example, if a society
permitted murder, we would all move out of town and live in seclusion. Also,
philosophers point out that many seemingly diverse standards of behavior in
fact reflect common values. For example, some cultures kill their elderly,
which is a practice that we find abhorrent. However, putting the elderly to
death is based on the principle that children should see to the happiness of
their parents, and this is a principle that we too have.
So, if we grant that there is
some commonality to moral values around the world, then, to that extent,
multinationals have moral responsibilities that cross cultural boundaries.
Philosopher Norman Bowie recommends three universal moral standards that are
appropriate to the activities of multinationals. First, multinationals should
follow the norms that constitute a moral minimum, which are advocated in all
societies. Second, multinationals should follow principles of honesty and
trust, which are moral norms of the market place. These are required as
foundational for any business operations, and the systematic violation of moral
norms of the marketplace would be self-defeating. Third, multinationals should
not violate human rights, such as basic liberty rights. Business depends on
economic liberty, which is part of political and civil liberty in general. So,
if we accept economic liberty, we must accept the whole liberty package. This
means that businesses should not operate in countries with human rights
violations unless they can be catalysts for democratic reform.
Philosopher Richard T. De George
offers a more specific set of guidelines for the following:
· Do no intentional direct harm to the
host country
· Produce more good than bad for the host
country
· Contribute to the host country's
development
· Respect the human rights of its
employees
· Pay one’s fair share of taxes
· Respect the local culture and work with
it
· Cooperate when local governments reform
social institutions, such as land and tax reform.
De
George believes that third world countries lack adequate background
institutions, such as regulatory agencies, which makes it all the more
necessary for businesses to adherence to moral standards.
In view of how strong the profit
motive is to businesses, we may wonder how realistic many of these
cross-cultural moral principles are. Until a few hundred years ago, most
philosophers believed that moral principles were pretty useless unless people
believed in God and were afraid that God would punish them for evil deeds. In
more recent times, social contract theorists argue that fear of punishment from
governments is the only thing that will motivate us to follow moral principles.
Perhaps we can generalize from these views and say that we may not follow even
the best moral principles unless an external authority monitors our actions and
punishes us when we go wrong. We can see the moral responsibility of
multinationals in the same light. There are reasonable moral guidelines that
multinationals should follow, such as those offered by Bowie and De George,
which managers of multinationals can probably figure out on their own. Without
an external monitoring authority, though, businesses may set them aside for
reasons of profit. Fortunately, several external mechanisms are already in
place to punish irresponsible multinationals. News organizations, the United
Nations, international human rights groups, and environmental groups all take
special interests in seeing that multinationals live up to high standards. All
of these organizations have limited clout, though, and rely mainly on the
threat of bad publicity to bring about change. But even this is effective since
most large businesses believe that their reputation is their biggest asset.
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